There is a moment of truth between a doctor and patient when a diagnosis is made and a treatment regimen is determined. It might be a routine ailment with a simple standard of care protocol. Or it could be a complex or difficult diagnosis that leads to referrals, more testing, and life-changing decisions about life style and treatment options.

But in either case, it’s a moment of truth that summons the best analysis from the professional and the most transparency from the patient.

Given how complicated and busy the typical physician’s schedule has become, it’s unlikely that most doctors will have convenient and timely access to the latest in clinical research or knowledge of the newest therapies. There are valuable tools for quick reference of drug interactions, but getting access to relevant content like the pathophysiology or mechanism of action behind a new class of drugs takes more time.

I don’t want to be overly skeptical about the role of innovation in pharma, particularly in the digital marketing space. But a couple of experiences in the last few weeks have led me to wonder whether, a few outstanding individuals and companies notwithstanding, most of pharma will never really build that capability in-house.

Increasingly, what I’m hearing from pharma is, “I just need someone to do it for me.”

A simple bell curve helps to paint the picture.

Where do you fall on the curve?On the left hand side of the curve is a very small minority of digitally savvy marketers who know what they’re doing. That’s labeled, “I’ll do it.” The big hump of the curve, where most pharma marketers are, is labeled, “You do it.” At the trailing end of the curve is the “Do what?” segment, the laggards – those who haven’t even figured out the impact of digital marketing. They’ve heard about it, maybe they’ve done a couple of one-off projects, but they still don’t recognize that digital needs to be core to their strategy.

Most of the digital pharma marketing conferences and trade magazines champion those on the left hand side of the bell curve – the minority of marketers who get digital and are willing to experiment and try things. They have been given a budget to prove out digital – senior management has given them some rope to see if they will either make something happen or hang themselves.

It was a cold February 2010. The winter of Obamacare. There was active opposition from Republicans, the Democrats had lost a pivotal Senate seat in Massachusetts after the death of Edward Kennedy, and there was increasing ambivalence by the general public around President Obama’s healthcare proposal.

Even within the administration itself, people were saying, “Let’s move on, let’s move on, healthcare reform is dead, dead DEAD.”

Then, WellPoint happened.
In early February, WellPoint’s subsidiary Anthem Blue Cross Blue Shield announced it was raising insurance premiums on individual policies in California and Indiana by 39%, with price increases expected in nine other states as well.

There was a firestorm of reactions. Health and Human Services Secretary Kathleen Sebelius wrote a letter to the president of Anthem voicing serious concerns about the increases. Wellpoint’s CEO Angela Braly was forced to testify before Congress.

And suddenly, healthcare reform was back on the front burner. WellPoint couldn’t have chosen a worse time to raise its prices. If it had waited even six more months, it’s very possible that healthcare reform would have faded away for lack of interest and urgency.

But instead, WellPoint handed Obama a public relations coup. Very quickly, WellPoint became exhibit A in the court of public opinion arguing that the health insurance industry was unfairly profiteering.

It was a watershed moment. A WellPoint Moment.

Overnight, media outlets, editorial boards, social media, and politicians were demanding health insurance reform. Republicans were back on their heels. Democrats were able to seize the moral high ground and they passed the reform bill on March 21, 2010 which was then signed into law by the President late that night.

Barely a month after it seemed like healthcare reform was dead, WellPoint’s move on pricing became the political catalyst for historic changes that are still being felt today.

Is this pharma’s WellPoint Moment?Last year there was an uproar over Gilead’s pricing on Sovaldi for Hepatitis C. Economic pushback from insurance companies and PBMs along with new competitive alternatives, however, forced Gilead to negotiate discounts. The issue slipped off the front page.

Then the young and brash Martin Shkreli, CEO of Turing Pharmaceutical, jacked up the price of a generic drug by over 5,000%. Shkreli couldn’t have chosen a worse time.

Election cycle candidates, both Republicans and Democrats, began calling for price reforms and/or pricing limits. Reporters began looking at other recent drug price increases. Valeant was served two federal subpoenas related to its pricing.

For those in pharma who may have hoped this issue would fade away like last time, their hopes were in vain. It was a hot topic in the recent primary debates, and Hillary Clinton has recently called on the FDA to accelerate approval of generic competitors and asked the FTC to investigate what she called “anti-competitive price gouging.”

While in London recently for a series of meetings, I repeatedly heard the English phrase “fit for purpose.” It’s become a cliche for many in England, but I was struck by its syllabic crispness and brevity.

The idea of “fit” makes me think of Charles Darwin’s theory of “survival of the fittest.” The fittest are those who are best able to adapt to changing environments, or in the case of a business, a changing market. Successful companies survive, transition, evolve, exploit and pivot over time. They are fit for purpose.

It is not the strongest of the species that survives, or the most intelligent. It is the one that is most responsive to change.

Motorola as a cautionary taleRecently, there was media coverage about how Motorola has essentially died. It was slowly broken into pieces and sold off to various other companies. Google bought its cellphone business, Motorola Motions, for $12 billion a few years ago, and just unloaded it to Chinese PC manufacturer Lenovo for $2 billion. Ouch.

At one point in time, Motorola owned 60-70% of the cellphone market, had 150,000 employees and was one of the leading tech innovators in the world. They’re the ones who brought the mobile phone to the masses. They invented the police radio. They invented the car radio. They commercialized independent satellite communication.

There was a lengthy period of time during which everyone would have assumed that Motorola would be around forever. Until they weren’t.

There was an era when Motorola was fit for purpose. Until it wasn’t.

Motorola was a product company with a legacy of good R&D and solid commercialization, but they lost touch with what customers wanted. It’s an important cautionary tale for all of us.

For several years, pharma has attempted to move “beyond the pill” to offset declining product pipelines. The dream is to find new revenue opportunities. New business models.

But as we’ve seen, these new products and service experiments are rarely commercialized. If you study the revenue mix on any pharma P&L statement, you’d be hard pressed to find any real revenue beyond pills.

So, what’s the problem?

Well, it’s not just pharma. Successful new businesses that launch in the shadow of large legacy product portfolios are rare in any industry.

$100 Million or Bust
A few years ago, I was working with a global CPG company with a vibrant innovation team. But the success bar for moving a new idea or business model out of the lab was having visibility to least $100 million a year in revenue. Soon.

This meant that only the most obvious, non-risky ideas got the capital needed to grow. Promising but speculative projects were left to die on the vine.

So the challenge of commercializing innovation is not unique to pharma, but that doesn’t let us off the hook. There is an urgency to figuring this out.

The Urgency has Changed
A few years ago the focus was on finding new ways to backfill declining revenue from the patent cliff. But now the product pipelines for biologics and new orphan drugs for rare diseases could not be more robust. Revenue is growing again.

The real reason for today’s urgency is not revenue, it’s the changing customer environment. We now have the need to not only prove outcomes but to improve the patient experience. Soon.

At the ACA party, there are 15 pharma companies standing around a room with only 10 chairs. Which means that when the music stops, five of them are SOL.

That’s the future for pharma in a world in which all providers are at-risk and outcomes data are more important than volume discount pricing when it comes to therapy decisions.

Right now, the most common business strategy for healthcare companies managing the changes brought on by the Affordable Care Act has been consolidation. Everywhere in the system, players are merging. PBMs are consolidating and health systems are gobbling up every type of healthcare service, from physician practices to labs, urgent care to long-term care facilities and community hospitals in an effort to become large, integrated health networks (IDNs).

What I liked most about a recent HBR article was what wasn’t mentioned.

The recent Harvard Business Review article, “How Merck is Trying to Keep Disrupters at Bay,” is all about disruption, and anyone who reads HBR on a regular basis knows that anything written about industry disruption or disrupters owes at least a tip of their hat to Clayton Christensen.

Christensen, a Harvard professor, has written extensively about disruption, innovators and the innovator’s dilemma, highlighting the fact that most large companies, including pharmaceutical companies, are not great at innovation or staying nimble enough to respond to changing customer needs and expectations.

Often it’s the small startup companies who aren’t respected by big companies that wind up disrupting the marketplace. They upend the value proposition in the marketplace, and by the time large and established companies can see what’s happening, they’ve lost market share – or maybe even the entire market.

I think it’s interesting and very compelling that Merck – a large and established company – recognizes this threat and is trying to work from both the inside-out and the outside-in to keep disrupters at bay.

The HBR authors reference another large company, IBM, and how it essentially remade itself 20 years ago under the leadership of Louis Gerstner, who wrote his own best-selling book, “Who Says Elephants Can’t Dance?” on the IBM journey.

The way Merck is doing it really impresses me. Merck recognizes that as a firm it already has certain core attributes, capabilities and priorities that it isn’t going to throw out. But by creating an internal Emerging Businesses (EB) group, it’s also inviting a high level of innovation.

Merck has tasked this small group to look outside the firm, but also, and more importantly, within the firm for new ideas for both products and services. EB created a Strategy & Innovation Council to identify and scale new internal initiatives and a Global Health Innovation Fund to find external partnerships.

Fundamentally, Merck is a products firm. They’re a drug manufacturer, but they recognize that innovation extends beyond new Rx products and into the entire customer experience, which can include other revenue opportunities like services and technology.

I’ve already written about the primary care physician as an “endangered species.”

This emerging situation highlights the important role of Nurse Practioners (NPs) and Physician Assistants (PAs), those professions that are often lumped under a category called “Healthcare Extenders” or HCEs. Sometimes they’re known as the “Allied Professionals” within healthcare. There are currently 150,000 nurse practitioners in the US.

The Last Mile in Healthcare DeliveryI often consider these HCEs or allied professionals as providing the “last mile” in healthcare delivery.

Physicians have traditionally done the tasks of diagnosing the illness, writing the prescriptions and monitoring the patients, but as primary care physicians are called on to see more patients, they are able to spend less and less time in the exam room. And that’s where the “last mile” comes into play.

For example, some patients may ask, “Now that I have this disease, how do I manage it?” For them, the last mile is patient education. Others may be encountering drug side effects. For them, the last mile is patient support or discussion about an alternate therapy.

Lifestyle changes? Coaching is the last mile.

All of these support requirements will fall more and more squarely on the shoulders of the allied professionals.

I recently attended the American College of Physicians’ (ACP) Internal Medicine Meeting, the annual national conference for internists and primary care physicians. It was well attended and offered a mix of clinical presentations on new advances in medicine, seminars about the practical side of running a primary care practice, and policy updates on the Affordable Care Act.

The Internist as your Healthcare Quarterback
This group of physicians is arguably the most important in the field. Primary care physician keep our health history, coach us on healthier lifestyle choices, and they are often the first to diagnosis a life-threatening problem.

These are also the clinicians who have to triage the millions of newly insured patients while at the same time dealing with declining reimbursement rates. There is a reason why internists are considered an endangered species.

Yet there was no hand wringing or complaining at the ACP conference.

Given the challenges for this group of doctors, I expected to hear a lot of moaning and complaining, but the reality is that physicians are already moving forward with the new ground rules to build and maintain their practice. They’re embracing the changes despite more complex and tedious record keeping. Ultimately, physicians want to get everything settled so they can get back to their patients.

The announcement that Novartis and Qualcomm Ventures have formed a joint venture to invest $100 million in digital health is significant and suggests that big pharma is transitioning from talk to action in the strategy to “move beyond the pill.”

This new move builds on their ongoing relationship, which includes a partnership to use Qualcomm Life’s 2net technology for Novartis’ clinical trials.

What did Novartis see in Qualcomm and why does this partnership raise the bar for pharma?

First, a little about Qualcomm’s technology and how it is relevant for healthcare. The 2net is a device, about the size of a pack of cigarettes, that plugs into a normal wall outlet. There are multiple wi-fi, Bluetooth and cellular technologies built into the device that are able to connect with dozens of different wireless activity trackers, symptom trackers and wireless glucose monitors and then upload the data to a secure personalized web portal, where patients, caregivers and healthcare professionals can review.

Most of the top medical and consumer devices available right now automatically pair with the 2net, so users don’t have to go through the sometimes frustrating “pairing” exercise. This solves one of the “last mile” user experience hurdles to easy device connectivity, especially for consumers who aren’t mobile savvy.

David Ormesher CEO

David Ormesher provides leadership and direction for closerlook, inc., a digital marketing agency serving the pharmaceutical industry. As founder and CEO, Ormesher has taken closerlook from a small, creative media boutique and grown it into a recognized leader in creating innovative relationship-marketing solutions that help pharmaceutical brands build and maintain meaningful relationships with their most valuable healthcare professionals.

Since founding the company in 1987, Ormesher has created a rich, cohesive culture at closerlook by maintaining a hands-on approach to building client success and sustaining lasting account relationships. He has guided the growth and evolution of the firm, attracting a world-class team of account strategy, user experience, design, technology and relationship marketing services experts.

Ormesher is a frequent speaker at marketing conferences and is a recognized thought leader in the areas of interactive and relationship-marketing for healthcare.

In addition to his entrepreneurial leadership, Ormesher is also active on several non-profit boards. He serves on the boards of the Lyric Opera of Chicago; i.c.stars, an innovative business and leadership training program for inner city youth; and Global Relief and Development Partners, building the capacity of entrepreneurs in emerging economies. He is also an adjunct professor at the Illinois Institute of Technology Stuart School of Business where he teaches Customer Relationship Management.